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State of the Union Address – My Hope

State of the Union Address – My Hope

I know that there are many people who hope that Barack Obama will say X, Y or Z. I hope that Barack Obama continues what he stated in his inauguration address. These are the priorities that I hope he stays near in the State of the Union address.

Education – If we are truly going to compete against South Korea, Singapore, China and Europe, we’re going to have to do a better job of educating not just some of our kids, but all of our kids. Training some of our youngsters to be auto mechanics and plumbers, that’s fine. But we also have to train a new generation of computer scientists, nuclear engineers, astronomers and the like. We simply have to do better. In my opinion we simply need to put more resources into schools. Every child has to be able to work a computer by the time he/she graduates fourth grade. We simply can’t wait. Bill Gates started Microsoft when he was 19 or 20. He didn’t start using computers when he was in college. By the time he was in college, he was already miles ahead of his college professors. In order to get the next generation of Bill Gateses, we need to liberate our teachers from a lot of the standardized tests.

Strengthen the Economy – Four years ago, we were facing the worst recession that America has gone through since the Great Depression. The economy has added approximately 150,000 jobs per month for more than a year, but we need more. We still have a jobs deficit of over five million. We need to put America back to work. We cannot wait for big business. Big business is sitting on trillions of dollars. The only entity big enough to make the difference we need, if big business is going to twiddle their thumbs, is the US government. We need to invest heavily in infrastructure. We need to rebuild our roads, our schools and our bridges. Plus, we really need to infuse green industry. I propose a $100 billion investment in green energy this year, and in every year of the Obama presidency. That will put us in the driver seat with green energy. That will put hundreds of thousands of Americans to work. I like the idea of high-speed rail. I don’t like this particular map where it crisscrosses the whole country. Instead, I think it would be most effective along our most congested corridors – Boston to Washington DC, Dallas to Houston (including Austin and San Antonio), Tallahassee to Miami and possibly Chicago to St. Louis and Kansas City.

Immigration – It is time for us to get serious about immigration. So far, we’ve been listening to a lot of people who aren’t serious. The idea of “self deportation” is laughable. We need a serious path to citizenship. We also need serious penalties for employers who knowingly hire economic refugees (illegal aliens).

We need to reauthorize The Violence against Women Act.

We need to work towards Medicare for all.

By |2013-02-12T22:23:14-04:00February 12th, 2013|Domestic Issues, Economy, Energy, Obama administration|Comments Off on State of the Union Address – My Hope

LTCM – how to raise $1 billion, without breaking a sweat

(Much of the following information comes from the book When Genius Failed – The Rise and Fall of Long-Term Capital Management)

John Meriwether was the heart, soul and brains of LTCM (Long-Term Capital Management). He was an extremely successful trader, arbitrage trader, at Salomon Brothers. Then, a funny thing happened, he was caught up in a scandal in falsifying U.S. Treasury auctions. Although he was never accused, a top bond trader who worked under him admitted to the allegations. John Meriwether was forced to resign. That was 1991. He decided that he was going to start his own hedge fund. This is not to be just any old hedge fund. This was can be a hedge fund that was the home to the “best and the brightest.” He cultivated a close knit group that work together at Salomon Brothers. These weren’t the typical cigar chomping, hard drinking Wall Street types. He cultivated college professors. College professors like Eric Rosenfeld who was a Harvard business school assistant professor and Lawrence Hilibrand who had two degrees from MIT.

John Meriwether did have a reputation for making money on Wall Street. Because of his reputation, he should’ve been able to raise $100 million without much trouble. He wanted to raise an astonishing $2.5 billion. In order to do this, you have to do something special. You just can’t walk into Merrill Lynch, Goldman Sachs or some other Wall Street firm with your resume and a smile. There’s no way even to get $2.5 billion. On the other hand, if you walked in to one of these firms with Robert C Merton a prominent finance professor at Harvard whose theories were well known to all on Wall Street. If you’re able to walk in with Prof. Merton that would turn heads. What if you could walk in with Myron Scholes (half of the Black-Scholes model) who was somewhat of a rock star/financial guru on Wall Street. (Not only were these guys economic gurus, they both ended up winning the Nobel Prize in Economics while employees at LTCM.) Finally, if you were not buying the pure star power of Myron Scholes and Robert Merton and what about David Mullins? David Mullins was a former Vice Chairman of the Federal Reserve. John Meriwether had put together what must be called the Dream Team of Wall Street.

John Meriwether and his team collected large checks from around the world and from Wall Street. Italy central bank invested on $100 million. A large Japanese bank signed up for another hundred million dollars. The largest investment bank in Brazil ponied up $65 million. PaineWebber invested $100 million. The pension of Black & Decker invested $5 million. When the dust had settled, John Meriwether had raised $1.25 billion. This may not of been the $2.5 billion that he wanted to raise. It may have been far short of his goal but it was still the largest amount of money raised to start a hedge fund… Ever.

These guys could not lose. That was the feeling on Wall Street. It seems that everybody wanted to be a part of LTCM. Everybody put in money and almost as important everyone wanted in. What did everybody really know about LTCM? The truthful answer is, in spite of everybody putting up as much money as they could, they really didn’t know much. John Meriwether never explained his investment strategy. He basically walked into Wall Street executives offices and said, “we are smart and we are going to make money.” It was that easy.

By |2010-09-28T07:00:28-04:00September 28th, 2010|Books, Economy|2 Comments
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